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How much will the WLTP rock the second-hand market?

by Kim Winnepenninckx | Nov 09, 2018

Since 1 September, all new cars registered in Europe must pass the WLPT test, which is a more realistic way of measuring fuel consumption and CO2 emissions. This new turning point has given rise to many questions and concerns. What about the impact of this new standard on the sale of second-hand cars?

WLTP is having and will likely have other sometimes unanticipated effects on the second-hand market.

The first among those effects have already made themselves felt last summer. To offload their cars which were still tested under the old NEDC system, importers and distributors offered such attractive sales that former fans of used cars have turned to the new car market. In August, the registrations of new cars rose by as much as 31% in Europe. A very artificial rise, which was due to the fact that the date for the new standard is fast approaching, and so dealers were forced to register their unsold stock themselves while it was still possible to do so. This flooded the second-hand market all at once with several thousand "zero kilometre" cars.


Extend or wait...

We all know the story: the WLTP consumption test process has often had a negative effect on CO2 values. Even extrapolated figures, known as NEDC 2.0 or correlated NEDC, are often higher. By between 10 and 15% on average.

Since most European states have put in place an automobile tax that is CO2 sensitive, the car fleet sector has shown considerable prudence. Some managers took advantage of the good summer conditions to acquire and immediately register their vehicles. But most preferred to wait until the manufacturers published their WLTP/NEDC2.0 figures before placing their orders. Companies have thus preferred to extend the lives of their cars.

The ones that did not wait for the publication of the figures to sign their purchase orders are now faced with a different issue: waiting times for delivery of their new cars. The reason for this is that many models were not tested in time (and some are still not), either because of revised production, or because of the waiting list in test laboratories. Many manufacturers were late in having the values for (some of) their models ratified.

In any case, the consequence is the same: while awaiting the order or delivery of their cars, the models already in circulation are extending their careers on the road, with higher kilometre readings as a result. Those cars will arrive later than expected on the second-hand market, and probably all at around the same time, with the difficulties that one can imagine in selling them on as fast as possible. This situation will result in a certain imbalance between supply and demand for these four to five-year-old cars that have between 140,000 and 180,000 kms on the odometer. Their price will therefore increase significantly in Europe. The trick will be to show the right degree of aggressiveness at the time of the auctions in order to be sure to stay in the race.


The future with CO2?

In two to four years' time, the first WLTP-tested cars will in turn arrive on the second-hand market. Hard to predict what exactly will happen. Nevertheless, the tax system won't change: it will continue to be linked to CO2.

Today, most European markets have agreed to relax the tax burden of the WLTP by agreeing to use the NEDC 2.0 values as the basis for calculation. We repeat: those values already tend to be higher. But sooner or later, depending on the country, it is the WLTP values that will definitively serve as the basis for tax calculation. This will, moreover, have an impact on each of the options on CO2 values.

It therefore seems logical for buyers of second-hand cars to look for vehicles with the lowest possible CO2 level and, thus, perhaps, for the older cars. For even if the newer cars are indeed less polluting than the older ones, they will in fact show higher CO2 levels. This is the reality of the WLTP. The low-emission zones and other restrictions that are springing up around (big) cities will nevertheless reduce this effect. For in those areas, it is often the Euro norms that prove relevant.

It may be, however, that the market moves instead toward recent second-hand cars, but ones with fewer features... It is still a bit early to tell, since, as purchases have been postponed, it is difficult to evaluate just what the behaviour of the typical buyer (especially of fleets) will be on the new car market.